GR L 27033; (October, 1969) (Digest)
G.R. No. L-27033 October 31, 1969
POLYTRADE CORPORATION, plaintiff-appellee, vs. VICTORIANO BLANCO, defendant-appellant.
FACTS
Polytrade Corporation filed a suit in the Court of First Instance of Bulacan to recover the purchase price of rawhide delivered to Victoriano Blanco on four causes of action. The plaintiff’s principal office is in Makati, Rizal, and the defendant is a resident of Meycauayan, Bulacan. The defendant moved to dismiss on the ground of improper venue, arguing that the contracts stipulated suit could only be lodged in the courts of Manila. The Bulacan court overruled the motion. The defendant did not answer the complaint, resulting in a default judgment against him on September 21, 1966, ordering him to pay the principal sums with interest and attorney’s fees. The defendant appealed.
ISSUE
1. Whether venue was properly laid in Bulacan, the province of the defendant’s residence, despite stipulations in some contracts stating, “The parties agree to sue and be sued in the Courts of Manila.”
2. Whether the award of interest at 1% per month was proper.
3. Whether the award of attorney’s fees equivalent to 25% of the principal indebtedness was iniquitous or unconscionable.
RULING
1. On Venue: Venue was properly laid in Bulacan. For the first two causes of action, no stipulation on venue existed; thus, the general rule under Section 2(b), Rule 4 of the Rules of Court applied, allowing suit where the defendant resides. For the third and fourth causes of action, the stipulation “The parties agree to sue and be sued in the Courts of Manila” was merely permissive, not exclusive. It did not waive the parties’ right to sue in the venues specified in Section 2(b), Rule 4. The clause simply added the courts of Manila as an optional forum.
2. On Interest: The award of interest at 1% per month was proper. While the sales confirmation orders specified terms with interest accruing on postdated cheques beyond 30 days, the covering trust receipts expressly stipulated that all obligations would bear interest at 1% per month from the date due until paid.
3. On Attorney’s Fees: The award of attorney’s fees, amounting to 25% of the principal indebtedness and treated as liquidated damages (a penal clause), was not iniquitous or unconscionable. The defendant raised no defense, did not answer the complaint, and his actions suggested delay. The trial court had already reduced the fees from the stipulated 25% of the total amount (principal and interest) to 25% of the principal only. Under Article 2227 of the Civil Code, liquidated damages may be reduced if iniquitous, but the circumstances did not warrant such reduction.
The appealed judgment was affirmed, except that interest on the fourth cause of action should start from March 24, 1965, not as originally stated. Costs were against the defendant-appellant.